The Washington Post has a piece about Walmart's announced initiative to spend $50 billion over 10 years to source more products from the US, arguing that there are four good reasons to do so (even if $50 billion is but a fraction of what Walmart spends sourcing products):
• The economics make sense because, as Walmart US CEO Bill Simon says, there are factors - America's natural gas boom, rising labor costs in China, the risk of global supply chains - that make "insourcing" more attractive.
• Good public relations generated by a "made in the USA" effort allows Walmart to burnish its image "with measures that save money," while buying some cover "for less savory business practices that would cost it money to change, such as paying low wages and busting unions."
• According to the story, "Wal-Mart is actually selling more in the markets where it has long been manufacturing products. Chinese consumers are buying lots of Wal-Mart products that are made in China; Mexicans are buying things made in Mexico, etc. Wal-Mart can shorten those lead times by keeping production close to the buyer on both ends, in America and around the world."
• And finally, "American poverty is starting to hurt Wal-Mart's bottom line" … it is in Walmart's best interests to adopt and encourage manufacturing that will employ more people, who will then have money to spend at Walmart.
• The economics make sense because, as Walmart US CEO Bill Simon says, there are factors - America's natural gas boom, rising labor costs in China, the risk of global supply chains - that make "insourcing" more attractive.
• Good public relations generated by a "made in the USA" effort allows Walmart to burnish its image "with measures that save money," while buying some cover "for less savory business practices that would cost it money to change, such as paying low wages and busting unions."
• According to the story, "Wal-Mart is actually selling more in the markets where it has long been manufacturing products. Chinese consumers are buying lots of Wal-Mart products that are made in China; Mexicans are buying things made in Mexico, etc. Wal-Mart can shorten those lead times by keeping production close to the buyer on both ends, in America and around the world."
• And finally, "American poverty is starting to hurt Wal-Mart's bottom line" … it is in Walmart's best interests to adopt and encourage manufacturing that will employ more people, who will then have money to spend at Walmart.
- KC's View:
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The irony, as the story points out, is that is was some 30 years ago that Sam Walton launched a "buy American" initiative that eventually fell by the wayside because it simply became too expensive to buy American goods as opposed to cheaply produced items from overseas.
One thing seems clear to me: Walmart will engage in this "buy American" effort as long as it is in its best interests and seems like good business.
